Analysis: EU, China deal to ease chemicals trade curbs

25 May 2000 10:45  [Source: ICIS news]

LONDON (CNI)--Restrictive quotas, regulations and trading systems that hinder the export of chemicals and fertiliser from the European Union (EU) to China are to be reformed following a trade agreement struck between the Chinese government and the European Commission (EC).

It should pave the way for China to join the World Trade Organisation (WTO) by the end of the year, meaning that any other trading rights already secured by WTO members would also be enjoyed by EU exporters, under the Most Favoured Nation principle.

Details from the agreement struck by EU trade commissioner Pascal Lamy in Beijing last week have been unveiled. They include a promise to scrap restrictive quotas limiting the amount of NPK ( nitrogen, phosphate, potassium) fertiliser that can be exported to China, as soon as it formally joins the WTO.

The Chinese government also agreed to immediately reverse a steep reduction in quota made in January, agreeing that for the time being, EU exporters can sell as much NPK fertiliser this year as they did last year, namely 2.36m tonne.

Meanwhile, it agreed to partially liberalise the trading system, where EU fertiliser exporters have to sell their products through China's state importers. In future, they will be able to sell fertiliser direct to Chinese customers, until a ceiling of 2.7m tonne is reached in a given year. From that point, they will have to use the state importers. This ceiling is to rise by 5% a year.

An EC official said: "This will help exporters in the future. It will make things far more transparent."

Regarding all types of chemicals, the Chinese government has agreed to reform regulations that impose tougher environmental and registration standards on imported chemicals than those produced within China. This is in line with WTO rules banning countries from unfairly favouring local products with discriminatory laws.

By: Keith Nuthall
+44 20 8652 3214

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